The sooner we join euro the better, says Labour chairman

Charles Clarke, the Labour Party chairman, said yesterday Britain should join the euro as soon as possible to maximise its influence in the European Union.

In an interview with The Independent ahead of the Labour Party conference, which begins tomorrow, Mr Clarke said the re-election of Gerhard Schröder in Germany had strengthened the case for an early euro referendum, the most likely date being in the autumn of next year, if the Government's five economic tests were met.

"We see no constitutional bar to being in the euro. We do see political advantages, but we also think the economic issues have to be properly assessed." Mr Clarke warned that the prospect of war against Iraq should not delay a euro referendum, saying they were "two entirely separate timetables".

Downing Street and the Foreign Office believe re-election of a left-of-centre government in Germany has given Mr Blair a chance to weaken the Franco-German alliance which drives the EU by working closely with Mr Schröder.

Further pressure on Mr Blair to call a referendum before the next general election came yesterday from his close ally Peter Mandelson, who said the Government could not afford to "rest on its pro-European laurels" because the Tories were more sceptical.

He told the Italian Chamber of Commerce in London: "The opportunity to lead [in Europe] presents itself ... The issue facing Britain over the next two years is whether we have it in us to seize the opportunity."

He called for "a general extension" of qualified majority voting in the EU to prevent "reform paralysis" when 10 new countries join in 2004.